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Gina Lazanas FTIA (Balazs Lazanas & Welch LLP) and Deepti Paton ATIA attended a meeting of the NTLG GST Sub-committee on Tuesday 30 November 2010,. The group discussed a wide range of GST related issues including the restriction on GST refund provisions in the Taxation Administration Act 1953 and the recent High Court decision in Travelex Ltd v FCT [2010] HCA 33 regarding the GST characterisation of supplies in relation to foreign currency transactions. Some of the significant matters discussed were as follows:

  • The ATO's draft summary table of the levels of protection provided by the ATO's indirect tax rulings, advice and guidance products, following the changes effected to the indirect tax rulings regime from 1 July 2010. The Taxation Institute expressed support of the work done to date, but reiterated the need for the ATO to issue practice statement in this area.
  • The ATO's proposed consultation framework for indirect tax issues. The framework broadly proposes transparent and constructive consultation and was developed by the ATO partly in response to concerns raised by the Taxation Institute with respect to the ATO's consultation practices in the GST space. The Taxation Institute remains committed to effective consultation in respect of the NTLG GST sub-committee as well as other forum.
  • The ATO indicated that it will shortly issue the draft Decision Impact Statement with respect to the Travelex case setting out how it proposes to apply the decision.
  • A draft ATO fact sheet with respect to the claiming of input tax credits on acquisitions made with respect to mergers and acquisition activities was circulated to facilitate consultation.
  • The Full Federal Court's decision in FCT v American Express International Inc [2010] FCAFC 122, including concerns raised about the Commissioner's decision to change his arguments on appeal, as well as issues arising with respect to the penalties aspects that were in issue at first instance;
  • The ATO circulated draft examples of how to calculate contribution amounts under Indirect Tax Sharing Agreements for consultation and comment;
  • The ATO indicated that its draft ruling on retirement villages (GSTR 2010/D1) is now scheduled to issue as a final on 23 February 2011.
The Taxation Institute had also submitted further questions to the ATO concerning the implications of s. 357-60(3) of Schedule 1 to the Taxation Administration Act 1953. Broadly, this section may have the effect of impacting a recipient's entitlements to input tax credits in circumstances where the supplier has relied on a ruling about the GST characterisation of a supply. For example, if a supplier relies on an ATO ruling (public or private) that states that a supply is non-taxable (e.g. GST-free), then the recipient may not be entitled to claim an input tax credit in relation to that supply, notwithstanding that it may be properly characterised as a taxable supply to the recipient under the GST Act.

The Taxation Institute's GST sub-committee has decided to submit this issue to Treasury for consideration as there are concerns about whether the provision (in combination with other provisions in the GST Act) is unconstitutional.

Members wanting further information in relation to any of the above matters should contact us at Tax Policy.

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